WHEREAS the Government of Alberta annually establishes equalized assessment that the municipalities are requisitioned based on for Alberta School Foundation Fund (education property tax) on properties assessed within the municipalities; and

WHEREAS the Government of Alberta annually establishes equalized assessment that the municipalities are requisitioned based on for seniors housing foundations (seniors housing tax) on properties assessed within the municipalities; and

WHEREAS the assessor information that is used to calculate equalized assessment that the municipalities are legislated to use has a time lag that does not take into account changes in the current economic situation; and

WHEREAS the municipality is responsible for taxing for and collecting the requisitions on behalf of the requisitioning bodies and forward as requested; and

WHEREAS the municipality is only acting as an invoicing and collection agency for the Government of Alberta and other requisitioning bodies to collect these taxes on their behalf; and

WHEREAS some of these requisitions become in default due to current economic situations and are no longer collectible leaving the municipality to recover the amount owing through the seizure of assets; and

WHEREAS tax recovery through the seizure of land and assets is not always a healthy economic choice for the municipality or is not an option particularly in relation to linear property such as an oil leases on leased property;

Operative Clause:

THEREFORE, BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties (AAMDC) request that the Government of Alberta use current assessment data for determining requisitions to ensure that the taxes are distributed fairly over the current assessment base;

FURTHER BE IT RESOLVED that the AAMDC request that the Government of Alberta develop tools to reimburse uncollectable requisitions such as education property tax and seniors housing tax.

Member Background:

Due to the current economic situation within the Province of Alberta many municipalities have been burdened by the growing amount of uncollectible taxes including education property taxes and seniors housing tax. As a collection agency for these requisitions we must pay them whether we are able to collect the funds or not. With education property tax and seniors housing taxes being calculated based on equalized assessment the current assessment base is also being burdened.

The County of Paintearth No. 18 has been challenged with the collection of significant municipal, education and seniors housing tax arrears from numerous oil and gas companies. During 2015 the County of Paintearth was forced to recognize bad debts of approximately $601,000 of this included education property taxes of $70,300 and seniors housing requisition of $6,700. In the last few months we have been provided court documents from oil and gas companies stating that they are not obligated to pay tax arrears on the properties that they have acquired and that their license from the AER has been issued free and clear. In 2017 the County of Paintearth will be looking to write off over $300,000 in municipal taxes, $51,000 of education property taxes and $10,000 in seniors housing taxes. With the current economic state and licenses being issued free and clear it is placing a larger tax burden on the remaining rate payers within our boundaries.

RMA Background:

4-17S: Collection of Outstanding Taxes for Education Requisitions from the Province of Alberta

THEREFORE, BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties request that the Government of Alberta develop new tools or utilize existing mechanisms to ensure that municipalities that are unable to collect education property taxes through the tax recovery process be exempted from forwarding those uncollectible tax amounts to Alberta Education, or have the uncollectible amount refunded.

DEVELOPMENT: The AAMDC appreciates the responsiveness of the Government of Alberta in forming a working group to address this issue in response to previous similar resolutions (3-16S, 5-15F). However, the AAMDC is becoming increasingly concerned with the time that has elapsed between the working group developing recommendations for addressing the issue of uncollectible taxes on industrial properties (early 2017) and the response from the Minister of Municipal Affairs as to what, if any, actions will be taken to address the issue. As many rural municipalities continue to experience similar or greater levels of industrial tax arrears in the current fiscal year, expedient action on this issue is becoming an even greater priority.

The AAMDC assigns this resolution a status of Intent Not Met, but will continue advocating for a Ministerial response to the working group’s recommendation, and will consider amending this status if a response is received prior to the next round of resolution updates.

THEREFORE, BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties (AAMDC) request the Government of Alberta to amend the Municipal Government Act (MGA), and other provincial legislation to broaden the tax recovery power of municipalities to collect linear property taxes by granting a lien in favour of the municipality as follows:

A lien equivalent to that granted to the Alberta Energy Regulator (AER) by s. 103 of the Oil and Gas Conservation Act (OGCA) that being: “on the debtor’s interest in any well, facilities, and pipelines, land or interests in land, including mines and minerals, equipment and petroleum substances” and the power to garnish funds owed to the debtor;

A lien which ranks in priority (or equivalent) to the lien granted in favour of the AER by s. 103(2) of the OGCA;

FURTHER BE IT RESOLVED that the AAMDC requests the Government of Canada to amend the federal Bankruptcy and Insolvency Act to recognize municipal linear property taxes and other municipal non-property taxes as a secured interest in priority to other unsecured interests;

FURTHER BE IT RESOLVED that the AAMDC request the Government of Alberta to provide a credit reimbursement to compensate for the education property taxes that become uncollectable due to linear and commercial property bankruptcy.

DEVELOPMENTS: In 2016, Alberta Municipal Affairs had convened an inter-ministry working group consisting of representatives from Municipal Affairs, Energy, Treasury Board and Finance, Education, and the AER. The purpose of this working group was to address the concerns identified in resolution 3-16S and resolution 5-15F. More specifically, the working group explored how the suite of tools available to municipalities to recover unpaid linear property taxes could be expanded, as well as possible legislative or regulatory solutions to relieve or exempt municipalities from paying provincial education property tax requisitions on linear properties in which the municipality has not been able to gather tax revenues from the property owner.

Early in 2017, the working group completed their research and Government of Alberta staff internally developed options for the Minister of Municipal Affairs based on the working group’s findings. At this point, the AAMDC has been informed that the options are still being considered by the Minister and decision-makers in other related ministries such as Energy and Education. The AAMDC is concerned that as the Government of Alberta continues to evaluate options, rural municipalities throughout the province face increasing financial challenges caused by unpaid linear taxes.

The AAMDC assigns this resolution a status of Intent Not Met, but will continue advocating for a Ministerial response to the working group’s recommendation, and will consider amending this status if a response is received prior to the next round of resolution updates.